Children's Place (PLCE) printed a reversing hammer on Friday just after touching gap support at 70.51. This comes off a lengthy downtrend that began in mid-April after a negative divergence had developed. Take a look at the technical picture on a daily chart first:
Adding further bullishness is the set up on the weekly chart where PLCE shows very strong momentum and just tested its rising 20 week EMA. Take a look:
Normally a 20 period EMA test with a strong MACD represents solid reward to risk entry. The 20 week test, together with a test of both price and gap support, provides a nice argument for owning PLCE in the near-term.
(DISCLOSURE: I currently own shares of PLCE)
Happy trading!
Tom
About the author:
Tom Bowley is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market.
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